Despite a couple of attempts at a decent rally yesterday, the market still finished slightly negative for the day bringing us to an unbelievable 11 days out of 12 that we’ve finished down for the day in the S&P. It also brought us to a close below 700, but we remain in the 685-700 support range with the intraday low hitting 692ish. The economic reports remain frightening. Automakers reported horrendous results again for February, down anywhere from the 35-50% range, depending on manufacturer. We had Bernacke making comments, trying to put on a positive spin to the stimulus package while Geithner was testifying most the day, which of course was cheap filler for CNBC listening to our leaders asking dumb questions for the most part. I could only take so much and had to shut off the sound after awhile.
Gold remained under pressure most the day before finally climbing some towards the end of the day although gold stocks did a little better. Overnite so far it has been trading in a narrow range in the low 900s. The dollar continued its climb albeit a little slower. Tech stocks which acted pretty well most the day, got hit hard in the late afternoon, while energy stocks were mixed with the exception of FSLR which had a great day despite some late day profit taking.
So the question remains, where do we go from here. Personally I feel like that we may be closer to a short term bottom, although it does bother me that a lot of others seem to feel that way also, which typically doesn’t make for good bottoms. Looking at it from a historical standpoint, we typically have decent corrective rallies, even in extremely weak markets, sometimes as much as a 50% retracement. I’d settle for 25%. We haven’t in this sell-off yet, so though I feel like that we may have another 5% risk to the downside in the short term, I feel we may have more potential to the upside. Because of that I started nibbling at a few long positions, primarily with options and picking up a few shares of some of the safer high yield stocks. But notice I emphasize small here.
Take a look at the BPENER chart below. This has been a consistently reliable indicator on oil stocks and as you can see, we’re definitely getting into an oversold position here.
Positions held- long XLF,NLY, QQQQ, AMZN